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Chapter 22: Q8RQ (page 456)

True or False. Some economists argue that the single best thing that IACs could do for DVCs in terms of economic growth is to eliminate trade barriers between IACs and DVCs.

Short Answer

Expert verified

The given statement is true.

Step by step solution

01

IACs ways of helping DVCs

IACs can assist in the development of DVCs in several ways, like providing them financial aid, direct aid, admitting migrant workers, and expanding trade.The increase in trade will help in the development of the nation. The removal of trade barriers will increase trade volume and elevate those nations by improving their national income.

02

Reason for the statement being true

Most of the DVCs are producers of raw materials, and hence they are dependent on foreign markets. If the trade barriers are high, they won’t be able to market their products, and the supply of finished goods will also be less. Lowering the trade barriers will encourage trade among countries and help in the economic growth of these DVCs by large capital flows.

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Most popular questions from this chapter

What types of products do DVCs typically export? How do those exports relate to the law of comparative advantage? How do tariffs by IACs reduce DVC's standard of living?

Question. Which of the following policies would economists consider to be actions by a DVC government that will improve growth prospects?

Choose one or more answers from the choices shown.

a. Helping to extend the banking system to the rural poor.

b. Passing high tariffs against foreign products.

c. Constructing better ports, roads, and Internet networks.

d. Charging high fees for public elementary schools.

Question. Compare a hypothetical DVC with a hypothetical IAC. In the DVC, average per capita income is \(500 per year. In the IAC, average per capita income is \)40,000 per year. If both countries have a savings rate of 10 percent per year, the amount of savings per capita in the DVC will be _____ per person per year, while in the IAC, it will be _______ per person per year

a. \(50; \)4000

b. \(5; \)400

c. \(450; \)36,000

d. None of the above

Explain how the absolute per capita income gap between rich and poor nations might increase, even though per capita income ( or output ) is growing faster in DVCs than in IACs.

What is the demographic transition? Contrast the demographic transition view of population growth with the traditional view that slower the population growth is a prerequisite for raising living standards in DVCs
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